Question

Pinta Company acquired an 80% interest in Strummer Company on January 1, 2013, for $270,000 cash when Strummer Company had common stock of $150,000 and retained earnings of $150,000.
All excess was attributable to plant assets with a 10-year life. Strummer Company made $30,000 in 2013 and paid no dividends. Pinta Company's separate income in 2013 was $375,000.

Controlling interest in consolidated net income for 2013 is:



a. $405,000.

b. $399,000.

c. $396,000.

d. $375,000.

Answer 1

Answer:

b. $399,000.

Explanation:

Controlling interest in consolidated net income for 2013 will be 100% of parents revenue and 80% share of subsidiary's profit for the year 2013

100% of Pinta's income - 375,000

80% of Strunner's income-24,000

Total attributable to Pinta - 399,000